Following a week of back and forth negotiations in Houston, a plea bargain deal apparently collapsed at midday Friday for Lea Fastow, former assistant treasurer of Enron Corp. and the wife of its former CFO. However, her attorney indicated that negotiations would continue over the weekend.

Lea Fastow’s lawyers and the prosecution had signed off on a deal earlier in the week in which she would have pleaded guilty to a tax evasion charge and would have been sent to federal prison for five months (see Daily GPI, Jan. 9). However, U.S. District Judge David Hittner, who is overseeing Lea Fastow’s case, said he would only accept the agreement with a pre-sentencing report and reserving the right to increase the prison term.

Hittner had given Lea Fastow until noon on Friday to plead guilty and accept his terms, but her lawyers decided not to sign off on it. Hittner ordered her trial, now set for Feb. 10, to proceed. Pre-jury work began on Thursday. The plea bargain agreement still could move forward, but it would have to be on Hittner’s terms.

Without Lea Fastow’s plea agreement, a similar one being prepared for her husband, Andrew Fastow, also appeared in jeopardy. Sources said Andrew Fastow is negotiating a guilty plea in exchange for a 10-year prison term and a fine of $20 million. Andrew Fastow was indicted on 109 criminal charges related to alleged misdeeds at Enron.

“We’re a little disappointed,” said Leslie Caldwell, who is heading up the prosecution as Enron’s Task Force director. She had told Hittner that the plea bargain for Lea Fastow, coupled with her husband’s plea, would help with a “global resolution of two cases of significant magnitude to the government.”

Earlier in the week, Hittner had rejected the plea bargain completely. However, after reading sealed law briefs from the prosecutors and defense lawyers, Hittner agreed to accept Lea Fastow’s guilty plea and then review a pre-sentencing report before setting a sentence.

“Five months works. Anything more than that doesn’t,” said Lea Fastow’s attorney Mike DeGeurin. “It is a problem because of timing. If Andy, her husband, has to go to jail at some time, we don’t want the children to be without parents.” The Fastows have two boys, eight- and four-years-old.

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